Michael Jackson, the King of Pop, Steve McNair, former Tennessee Titans quarterback, and Sonny Bono, former entertainer and Congressman, all have one thing in common – a very public estate proceeding.

Michael Jackson, for example, had the proper estate planning documents – will, trust, etc. – but failed to properly fund the trust, which led to intense media coverage. However, both Steve McNair and Sonny Bono failed to plan at all – leaving both of their estates open to unnecessary estate tax consequences.

If there is one thing we should learn from celebrities, it is how to avoid the public eye when it comes to our estate plan. For example, Elizabeth Edwards, the late estranged wife of former Senator John Edwards, left her estate to a stand-alone trust outside of her will. For that reason, the intimate details of her assets and the disposition of those assets cannot be seen by the general public.

People should be aware that the most basic of probate documents – your Last Will and Testament and the inventory of your probate estate – are made public record during the probate proceeding.

Granted, it is highly unlikely that there will be a media frenzy surrounding your personal estate plan like that of Michael Jackson or Steve McNair, but your nosey neighbor, in-laws, potential creditors, or your adult child’s future ex-spouse, could easily find out the intimate details of your financial picture by going to the local courthouse and pulling your estate file if you failed to properly plan.

WHAT CAN MICHAEL JACKSON, STEVE MCNAIR AND SONNY BONO TEACH US?

Trust T.I.P.S. Trust and Investment Planning & Sentiment

Winter 2014Trust Issue

SO...HOW CAN YOU PROTECT YOUR PRIVACY?

By planning. This is a simple, but truthful and accurate answer.

You can protect your privacy by fully funding a stand-alone trust or combination of trusts to prepare for both incapacity and the after-death disposition of your assets. The utilization of a Revocable Trust, for example, can allow your designated trustee to:

• Meet with your heirs and financial advisors;• Obtain qualified valuations and appraisals of

the trust assets;• Handle any debts or expenses of your last

illness;• Invest all trust assets in a manner consistent

with the purpose and plan you provided in the trust;

• Prepare and provide an accounting of trust activities to the trust beneficiaries;

• Continue and protect the privacy of your financial assets; and

• Distribute the assets to your heirs in accordance with the trust provisions.

However, it is not just after-death proceedings that are made public. Etta James, the soulful Blues legend, suffered through very public proceedings as well when her family tried to act on her behalf when she became incapacitated.

Simply put, a failure to plan is what facilitates a need for a conservatorship or guardianship, depending on the method your state has chosen, which is a public proceeding. In 2008, there were over 8.7 million conservatorship proceedings in just 14 states, according to the National Center for State Courts. The graphic on page 2 details those results.

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Page 2

A fully-funded Revocable Trust or other estate planning tools could have been utilized to avoid the public eye when dealing with such private family matters as incapacity.

Becoming incapacitated as we grow older is becoming more of a “when” than “if” scenario because of advances in modern medicine. If you become incapacitated, someone will have to help take care of your personal and financial needs. Failing to plan for this scenario will likely result in a conservatorship or guardianship proceeding being instituted on your behalf.

Revocable trusts and other planning techniques can prevent the names of your relatives and beneficiaries, outstanding debts, and all probate assets from being disclosed. Because the trust will not be involved in any court-supervised proceeding, the trustee will continue to invest, grow, and safeguard your assets in a manner that serves the overall purpose of your estate plan.

Conclusion

Planning for both incapacity and death is the one way to avoid the mistakes of Michael Jackson, Steve McNair, Sonny Bono and Etta James. Consult an attorney, trusted advisor, or someone with experience in estate planning to ensure your plan will fully protect both your privacy and your estate.

SOCIAL SECURITY RETIREMENT BENEFITS: WHAT YOU NEED TO KNOW

As of August 2013, 37,576,000 retired Americans were receiving Social Security retirement benefits totaling $47,735,000,000 per month. According to those numbers, the average retired worker receives $1,270 per month. 1, 2

1. How do you qualify for Social Security retirement benefits?

To qualify for Social Security retirement benefits, you must meet both of the requirements listed below.

a. You must be “fully insured”. In other words, you must have earned the minimum amount and contributed to Social Security for at least 40 quarters or 10 years. The threshold earnings level for 2013 was $1,160 per quarter.

b. You must be at least 62 years old.

2. Can you receive Social Security early?

Yes. If you are age 62 or older, you can qualify for Social Security Retirement benefits. However, your benefits will be reduced if you begin receiving benefits prior to your “Normal Retirement Age”. Full retirement benefits are calculated based upon your “Normal Retirement Age”. For persons born in 1937 or earlier, the “Normal Retirement Age” is 65. However, for individuals born 1938 or later, the normal retirement age gradually increases to 67 depending on the year of birth.

1 Table 2. Social Security Benefits, August 2013, Social

Security Administration, Master Beneficiary Record, 100

percent data. http://www.ssa.gov/policy/docs/quickfacts/

stat_ snapshot/

2 It should be noted that this article specifically addresses

Social Security Retirement Benefits and not benefits related

to Supplemental or Disabled Social Security Benefits.

Page 3

Trustmark Wealth Management is a division of Trustmark National Bank. This article is strictly for information purposes and is not intended as an offer of solicitation for any transaction. The information herein is not intended as legal, tax, or investment advice. For such advice, consult an attorney or tax professional.

Example: Sally, a fully insured worker, was born in 1937 and chose to retire at age 62 – 3 years earlier than her normal retirement age of 65. Unfortunately, Sally’s choice to retire only 3 years early cost Sally nearly 20% 3 of her Social Security retirement benefits.

3. What are the benefits of waiting until later than the “Normal Retirement Age”?

The benefit increases. If Sally chose to delay her retirement from 65 to age 70, her benefits would have increased by 6% 4 for each year she delays retirement. However, no additional increase would be received for delaying Sally’s retirement past age 70.

4. Will working after retirement reduce your Social Security benefits?

It depends. If you have reached your “Normal Retirement Age”, then there is no reduction in benefits for the amounts you earn by working.

However, for the years prior to your “Normal Retirement Age”, your benefits are reduced by $2.00 for every $1.00 you earn over the exempt amount. For 2013, the exempt amount was $15,120.00 annually.

In the year you reach your “Normal Retirement Age”, your benefits are reduced by $3.00 for every $1.00 earned over the exemption amount until “Normal Retirement Age”.

For 2013, the applicable exemption amount is $40,080 annually.

5. What happens to your Social Security benefits at death?

It depends on when you pass and who your dependents are when you pass. There are both survivor benefits for spouses caring for minor children and survivor benefits for the minor children, themselves, if you were a fully insured or currently insured worker when you pass. These benefits only last until the children are no longer minors.

Once the surviving spouse reaches retirement age, he or she may begin receiving the Widower’s benefit.

6. Will you pay income tax on your Social Security retirement benefits?

Possibly. If your adjusted gross income exceeds the threshold amount, then you could be taxed on a portion of your Social Security Retirement benefits. The threshold for married couples filing jointly is $32,000.

Conclusion

Social Security retirement benefits’ calculations and qualifications are complicated. When planning for your retirement, you should take these issues into account and should consult with an individual experienced in issues relating to Social Security benefits.

3 The 20% loss of benefits is estimated. To fully calculate

the loss, the Social Security Administration takes into

account the Primary Insurance amount and reduces those

benefits by 5/9 of 1% for each month less than the “Normal

Retirement Age”.

4 The 6% increase is specific to persons born prior to 1943.

For persons born after 1943, the increase is 8% per year of

delay.

Richard Neumann Trust Division Manager

Jackson, MS

John Carter Trust Admin & Sales Manager

Jackson, MS

John Hensley Trust Regional Manager

Mobile, AL

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